October 20, 2008

I’m feeling a bit behind in economics stuff. So I thought I’d throw up a working definition of capitalism, open to wholesale revision if necessary, of course.

Say that capitalism has two main features.

1) Blind accumulation / consumption.

Capitalism is a system of economic and social organisation oriented toward production as an end in itself. Clearly the ‘profit motive’ is important here. But the ‘profit motive’ is only one of the more important of the various group or individual inclinations created by and sustaining a system oriented to production for its own sake. It’s a secondary question what is produced, and why – which is why Marx talks about people being subordinated to the processes of production, rather than the other way around. Another useful touchstone here is Keynes, in The Economic Consequences of the Peace.

The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a society where wealth was divided equitably. The railways of the world, which that age built as a monument to posterity, were, not less than the pyramids of Egypt, the work of labour which was not free to consume in immediate enjoyment the full equivalent of its efforts.

Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the labouring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority, and the well-established order of society into accepting, a situation in which they could call their own very little of the cake that they and nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated.

Another good touchstone here would be Weber on the Protestant Ethic, but it’s a while since I read it. And thinking of Weber, an important point of divergence from Keynes in this passage, I think, should be his analogy with religion. Depending on our understanding of religion, this may be fine – but it’s important to register, I think, that a general social inclination towards blind accumulation need not be produced by any individual or group faith in or orientation towards that end. We ourselves don’t need to believe in the virtues of blind accumulation in order for our actions to part of a social-economic system oriented towards it.

Another question here is what we mean by ‘production’. Capitalism counts certain behaviours as productive and others as non-productive. Indeed, there’s a two-fold division – between those activities that supposedly fall entirely outside the capitalist system of production (say, much of family life), and those in some sense non-productive activities that are universally acknowledged as central (e.g. finance). Not sure I’ve got anywhere to go with this just yet. But worth noting, I think, that lots of stuff that’s supposedly external to capitalism even in the former sense is no doubt important to the reproduction of the social forms that everyone acknowledges as capitalistic.

More should be said on all this, obviously, but moving on…

2) A system of production oriented around wage labour.

This is altogether shakier than #1, I think. Clearly slavery has played and continues to play a profoundly important role in capitalist accumulation. Nevertheless, the reason Marx gives labour such an important role in his economic & political writings isn’t just that he’s participating in and trying to foster a political movement of the working class; and isn’t just because labour as a transhistorical activity is essential to any production at all. Marx also sees wage labour as an essential feature of the capitalist system. (c.f. Diane Elson on The Value Theory of Labour.) My historical knowledge is more than a little shaky – but I think it’s probably fair to see capitalism proper emerging alongside the social upheavals that created a large-scale market in wage labour.

~~~

Probably worth noting, however, that we don’t necessarily need to find an essence of capitalism in order to, like, talk about or oppose it. It’s worth at least thinking about what such an essence might be, however, since lots of the central features of capitalism that we want to fucking abolish – e.g. massive exploitation – clearly aren’t specific to capitalism (even if capitalism’s specific forms of exploitation are). Also, contrariwise, because if we have an inaccurate sense of what’s essential to the capitalist system, we may direct our critiques and action against political or social forms that capitalism (and its regimes of exploitation) can operate perfectly well without.

Or it may be unhelpful even to think in these terms, I’m not sure.

[As will become customary, the ‘NP’ tag means that this stuff is… erm… in dialogue with Rough Theory. NP has a couple posts about Diane Elson’s essay here, for instance.]

October 13, 2008

I don’t think I’m going to get a proper post up this evening, what with not knowing hardly nothing – but that won’t stop me making gloomy sounds. The synchronised plan the eurozone leaders are busy announcing obviously fails to address the fundamentals of the crisis. So does Brown’s plan, in the UK. You can’t borrow your way out of debt, as my bank manager keeps telling me. The real-economy problem is that ‘developed’ countries have been consuming resources far beyond their objective ability to appropriate them – and this appropriation has been funded by debts with the countries the resources are supposedly ‘appropriated’ from. Until that global imbalance[1] is addressed, by a massive realignment of economic and political power, things are going to be in ‘oh shit’ territory. (Things may be in ‘oh shit’ territory afterwards too, of course – but that’s a separate thing.) Sobering reading for tonight, then, is this post over at EconoSpeak.

“A change in sentiment on the dollar, if it occurs, will be sudden, unexpected and massive. An outflow of funds would stop the Fed/Treasury strategy in its tracks and mark the end of any meaningful program to restore financial markets. No one knows what the tipping point could be, or even whether the most enlightened policy can avert it.”

Since a change in sentiment on the dollar seems (to me) to be a condition of the establishment of a new global economic system, this fact doesn’t bode well. There’s no particular reason why all aspects of a structural realignment of capitalism around a geopolitical order yet to be established need to happen at the same time. It’s possible, I guess, that the current system can be shored up in the short term while longer-term adjustments… play themselves out. But since the current bailout plans seem to be a continuation, by other means, of the very economic policies and capital-movements that produced the disaster, I find it hard to believe that they’re going to solve anything. My prediction: next week will bring bad news for everyone except Fred Goodwin’s family.

More to follow sooner or later, though.

[1] Don’t really like the resonances of ‘imbalance’, which sometimes implies some sort of movement towards perfect economic equilibirum, but fuck it, the word’s still fine.

September 25, 2008

Okay. So I think it’s clear enough that I don’t know what I’m talking about. But even though the blog is, yes, still dormant, it seems shameful not to post anything at all on the financial crisis. Major apologies for ignorance & incomprehension. This incredibly confused stuff is all coming out of newspaper-skimming and blog-glancing. But so:

Subprime mortgage fiasco symptom of larger problem. Crisis aspect the second: recent U.S. consumer spending fuelled by debt. Middle and working class wages stagnant for thirty years; breaking of the back of labour; long-term retreat / collapse of left; victory to capital in the capital-labour conflict. Economic growth nonetheless still fuelled by increasing consumption. Gap between consumers’ income and expenditure plugged by household debt. Debt has to be repaid, and can’t be repaid without decline in expenditure. Unsustainable growth. (Enables a massive transfer of resources to the capitalist class.) (Roger‘s been talking about all this for years.)

All this is, I hope (???), passably adequate, as horrible crude summary. The post-war order has worked to appropriate the resources of the ‘developing’ world, based on a system of free trade oriented towards and underwritten by American power. The conveyor belt of resources from poor world to rich is maintained by the power-sodden ‘price mechanism’ – the products (and labour) of the poor priced cheap, the products (and labour) of the rich priced high: exchange of equal values = massive appropriation.

As US hegemony falters, expenditure comes to rely on borrowing from overseas. Within the US economy, comparable movement of resources from the working- and middle- to the ruling classes also comes to based, from the eighties onward, on the extension of credit. The deregulation that permits massive debt expansion is also part of the market fundamentalism that justifies and underwrites the global system of free market exploitaiton. [Apologies for so much boiler-plate stuff. There’s some content here, I think, beneath the confusion.]

Three interlinked failures of the economic system, then. 1) Just general shadiness of deregulated financial markets, which make panics, and corresponding liquidity-collapses, more likely and more severe. 2) But panic’s based on the fact that it’s not possible to appropriate indefinitely income that only exists through borrowing. Solvency, not just liquidity, failure. 3) And all this based on a more general failure of globalised markets, in an era of waning American power, to supply quite enough resources to the developed world, given growth requirements. The financial sector is, by definition, non-productive. If it’s going to keep making people money, there has to be a corresponding growth in the real economy. US production ain’t all that; and the global trade system isn’t supplying enough stuff to sustain expansionist greed. I think. (?????)

Plus, you know, crises are just a feature of capitalism. Wages are depressed by the capitalist drive to profit – which means demand is reduced, because no one can fucking buy anything – which means a crisis of overproduction. Since the long-term depression of wages has been ‘masked’ by the credit bubble, its only when the bubble bursts that the crisis hits, and the ‘real’ redistribution takes place. That redistribution is currently being managed by the US elite, obviously – but it also involves systemic change, as the capitalist institutions that enabled the appropriation are threatened or destroyed by its effects. We’re in the middle of a major structural transformation – and there’s little thought going into how it’s managed – what kind of capitalism ‘we’ (whether Bushites or the all-but-non-existent left) want to see, after the death of neoliberalism.

The calamitous Paulson plan is calamitous for various reasons. No fucking oversight to speak of. Absolutely no attempt to limit executive pay-packets. But above all, obviously, the fact that it’s a simple redistribution from the taxpayer to Wall Street. As Calculated Risk says: “The plan only limits the Treasury to “$700,000,000,000 outstanding at any one time”, so the total purchases can exceed $700 billion. In fact, every time the Treasury sells some securities, they will probably plow the net proceeds back into more troubled assets until the entire $700 billion is gone.” Paul Krugman has been banging the drum over what price ‘troubled assets’ will be bought at. If they’re bought at market value, there’s no injection of capital; financial trading may be kick-started, but there’s no end to the insolvency crisis. If, on the other hand, ‘troubled’ assets are bought at above market value, it’s just a giveaway (with corresponding theft). And this is a problem not only because it’s obscene, but also because we’re in a crisis driven, in part, by lack of demand due to wage-depression – so transferring money from consumers to financial institutions = extra-bad. Paulson, Bernanke et al are obviously working for Wall Street – but the logic of the system is such that individual capitalists get rich by destroying their means of exploitation.

The Chris Dodd alternative proposal would (if I understand right?), give the newly-created government entity (the ‘bad bank’) conditional shares in any firms from which bad assets are bought. Value of shares = 125% of the losses incurred from resale of assets. Recent news reports seem to claim that Paulson et al have accepted something like this – which I’ll believe when I see.

Point remains: there’s a frightening lack of vision in response to the implosion of capitalism’s current form. Just to be clear: it’s absolutely not worth crowing over former-fat cats getting pissed at the Slug and Lettuce. They’ll all have smart jobs in whatever new order emerges. Capitalism reproduces itself through crises – question is: what’s next. Obviously, nationalisation is back on the policy agenda.

But underlying story = a historic moment in the decline of US power. The Pax Americana was, of course, only pax if you ignored the countless violences that maintained it. But the last time a superpower lost its ability to appropriate the world’s resources through laissez-faire trade, we had two world wars, separated by a great depression. Economists tell us that free trade stops wars. In fact, of course, decisive military dominance enables ‘free’ trade.

The two big questions rasied by all this are, then:

What kind of new capitalist system will be born from this restructuration?

How will it relate to a new multi-polar world?

[Subsidiary question: How many of us will die in the coming wars for resources, as the idea that free trade binds us all together in a Fukuyamian paradise of mutually non-coercive recognition and exchange goes the way of Hegel’s Prussian state?]

[Bonus marks: how hard can it really be to develop a credible alternative to the dominant ideology, so that when that ideology collapses under the strain of its system’s contradictions, something more human is ready to take the stage? This crisis has been a disaster for the left.]

[I should really edit, expand, and perhaps then supress, all of this. But the BBC says agreement’s been reached about the US bailout plan – so I’ll post it now before all of the above is rendered obsolete. Serious serious apologies for incredibly weak knowledge & analysis. Not to mention typos, etc. * sigh *]

Comments Off on The Financial Crisis

June 14, 2008

Okay. I’ve been spending really quite a lot of time recently talking with N Pepperell (of the Rough Theory blog) about, you know, Marx and stuff. (Conclusion, at least on my end: ‘Capital’ = work of genius, but WTF with the Hegel already?) I’ve found it all just incredibly illuminating and enjoyable. But – I guess unsurprisingly – it turns out that only a fraction of NP’s ideas actually make their way onto Rough Theory. So I’m going to perform a dubious public service, by trying to summarise one of NP’s claims. I put up endless apologies and qualifications for almost everything I post here: the coin of the realm has been sadly debased. But let me especially stress: my attempted summary is going to make complete nonsense of NP’s ideas. My sneaky plan is to force NP to jump into the comments box below to correct me – and thereby elaborate this stuff in person. The provocation, then, is as follows…

At some historical point I’m more or less vague about [since, unlike NP, I’m not the sort of person who walks into copyright libraries and says ‘bring me everything you’ve got from the thirteenth century’ ;-)] something peculiar happened. You get the emergence of 1) the natural sciences; and 2) the social sciences. Now – the social sciences proper don’t turn up until, like, the nineteenth century. And we’re talking more like the seventeenth century here, I think. [This is completely embarrassing – I know nothing; nothing – but with courage and fortitude in the face of humiliation I persist…] NP’s claim is that you start getting the theorisation of society in a way that wouldn’t have made much sense to, say, the scholastic philosophers – a theorisation that would eventually become, thanks to further historical shifts I’m unclear about, the tradition on which the social sciences proper draw. (I guess we’re talking Hobbes, here, or something.) And at more or less the same historical moment (17th century ish, I think) you get the beginnings of an obsessive search for regularity in nature.

Question: Why?

Well, I guess the standard answer – the answer I imbibed when studying A-level history (I got top marks folks! O yes…) – is the rise of the Enlightenment; the decline of arguments from authority; the death of dogmatism; the emergence of empiricism. When I was studying philosophy at uni, this stuff tended to be keyed to Descartes. Scepticism! The refusal to accept aught but personal judgement! The speech of the senses, not the dogma of the schools! It is, of course, a world-historical-class irony that Descartes’ sceptical method has become a canonical authority. An irony, indeed, that it was even communicated, if we take its actual claims seriously. But this is by the by. (I’m deep into personal preoccupations here; this has nothing to do with NP’s argument…)

Enlightenment not authority, yes? Fine. But this has some flaws, explanatory-power-wise. Because, first off, why the Enlightenment? And second off, why the emergence of the theorisation of society at around the same time? There’s no very obvious reason why natural science and the theorisation of society should go together, historically. And yet – apparently – they do.

NP’s answer: It’s about capitalism. Or, rather, it’s about the development of social structures that would make the emergence of capitalism possible. Specifically (I think): urbanisation; the movement from forms of communal organisation that are more or less personal in nature (small communities more predominant than large ones) to forms of communal organisation that require substantial mediation through impersonal structures if they are to function. Markets, I guess, in part – though NP more or less comes out in hives if you start reducing capitalism to markets. Plus more complicated things I’m in no position to gloss – stuff, I think, about the genealogy of the transformation of the concept of ‘value’ that NP’s been discussing in relation to Marx.

So – you get a reconfiguration of society. And this relates to the emergence of the category of the social. And this happens in a complex and interesting way. We’re getting to the actual content of NP’s claim now – which I’m more than a little nervous about fucking up. (It’s just inevitable.) But with the move to new and much more substantial forms of social mediation, you get a new form of sociality, which one could call (if one were in the mood ) impersonal sociality. NP has developed this idea in great detail in relation to Marx. (There NP calls it ‘real abstraction’). The point is that this is a form of sociality that can be decisively distinguished from any form of intersubjectivity. It is a form of sociality that need not be conscious; need not be meant. Now in a sense all forms of sociality possess this property, in spades. Any kind of interpersonal relation has countless features that are not present to the wakeful consciousness of the persons interrelating. (Freudian & Derridean that I am, I tend to think that such features of interpersonal relations are totally predominant; but let me stress again that I’m largely wittering on my own account here, not glossing NP). Nonetheless, with the emergence of large-scale, highly complex, highly mediated forms of social organisation, this attribute of sociality takes on a unprecedented power and prominence.

NP’s claim is that this new form of sociality is not theorised as sociality; not at the time, or for a long time after. On the contrary, this new form of sociality is theorised as natural. What is theorised as sociality is the intersubjectivity that suddenly becomes more accessible as a theoretical category because of its social differentiation from the ‘impersonally’ social. The new dominance of the impersonal social divides the social against itself. The social becomes: 1) the intersubjective (theorised as the new category of the social) and 2) the impersonally social (theorised as the natural).

And this social change is what produces the new categories of both the ‘social’ and the (law-like) ‘natural’. Intersubjectivity becomes available as an object of enquiry as never before – it becomes ‘relativised’ as social when it suddenly breaks away from a newly emergent other form of sociality. And at the same time, it becomes plausible to treat the ‘natural’ as organised on law-like principles, because the ‘impersonally’ social is being treated in this way. One could say that the impersonally social is naturalised and then projected onto the natural world (just as the political economists ‘naturalise’ the laws of political economy). But the claim isn’t that scientific endeavour is based on some misunderstanding or projection. The claim is just that people become familiar with the idea of treating a non-intersubjective, non-intentional ‘law’ as impacting their lives – because such ‘laws’ are produced by the new enacted mediations of the impersonal social realm. So it becomes intuitive to investigate nature itself for ‘natural’ laws… with all sorts of interesting results.

(There’s some connection, I guess, then, between what NP’s trying to do and the ‘strong program’ in sociology. The point is that even if we like some contingent historical project, we can’t use that as an explanation for its historical emergence. Regularities in nature themselves can’t provide an adequate explanation for the sudden desire to look for regularities in nature. Similarly, the real existence of ‘society’ can’t explain the emergence of this concept of society – a concept we can then reinscribe in our articulation of the concept’s emergence. When NP talks about ‘reflexivity’, the point is that we have to also give an account of the historical changes which produce the concepts we use to analyse those historical changes.)

Anyway – all this is no doubt a travesty of whatever NP actually thinks. So: let me end by quoting (as I like to) Wittgenstein – busy justifying the (as it turns out posthumous) publication of the ‘Philosophical Investigations’…

“Up to a short time ago I had really given up the idea of publishing my work in my lifetime. It used, indeed, to be revived from time to time: mainly because I was obliged to learn that my results (which I had communicated in lectures, typescripts and discussions), variously misunderstood, more or less mangled or watered down, were in circulation. This stung my vanity and I had difficulty in quieting it.”

I’m not planning to sting any vanity here. 🙂 But I hope these results, more or less mangled or watered down (and communicated in discussion) have some sort of provocative force. What’s the real deal, as regards this stuff, I wonder?

[So as I say in the comments below (and as I predicted in the post…) plenty of this misrepresents NP wildly. A few quick (attempted) corrections, then:

1) Not theorisation of society/nature. Rather, experience of society/nature.
2) Not just emphasis on natural law, but also an organicist vision of nature associated with romanticism.
3) A whole host of problems involving the characterisation of the ‘impersonally social’. Basically: the sort of things implied by the phrase ‘impersonally social’ (e.g. markets) are part of the intersubjectively social. The real ‘impersonally social’ (asocial social?) can’t be identified with institutions, but rather operates through them.
4) Strike the use of the phrase ‘real abstraction’ – which is relevant, but not like that.

May 25, 2008

Deconstruction, or Derrida’s work, begins in phenomenology. Derrida starts his dismantling or unravelling of the metaphysical tradition by unravelling Husserl. And Derrida’s work will be marked from first to last by this engagement. In a work as late as ‘Specters of Marx’ we find Derrida reading Marx through the prism of phenomenology. I’ve said it before, but I think it’s important – everything that’s wrong with Derrida’s take on use value, and the relation between use value and exchange value, comes from his determination to see Marx in terms derived from phenomenology. The book’s last chapter, containing Derrida’s discussion of commodity fetishism, is subtitled “The phenomenological ‘conjuring trick’.” And here’s a key passage, in which Derrida discusses the transformation of the table’s wood into a commodity:

“Whoever understands Greek and philosophy could say of this genealogy, which transfigures the ligneous into the non-ligneous, that it also gives a tableau of the becoming-immaterial of matter. As one knows, hule, matter, is first of all wood.” [What is the relation of this ‘first of all’ to the ‘first’ that Derrida finds and criticises in Marx?] “And since this becoming-immaterial of matter seems to take no time and to operate its transmutation in the magic of an instant, in a single glance, through the omnipotence of a thought, we might also be tempted to describe it as the projection of an animism or a spiritism.” (‘Specters’, p. 191)

These last references to animism and spiritism aren’t unimportant; but to an extent they’re decoys. The really important phrase here is “the omnipotence of a thought”. Derrida sees exchange value as performing a phenomenological reduction on use value. And this is the basis of Derrida’s critique of Marx. Derrida believes that there is a pre-critical and a post-critical thought – a short-of and a beyond of transcendental criticism. He believes that any ‘materialism’ – like Marx’s – that has failed to traverse a Kantian or Husserlian transcendental space, will collapse into a naïve ontologising metaphysics. And so – with considerable textual violence – Derrida wrestles Marx into this phenomenological space, in order then to move beyond this (supposedly) naïve materialism.

What violence is involved here? In the first place, an understanding of exchange value in terms of “the omnipotence of thought”. Marx isn’t really discussing thought in the fetishism passage –commodity fetishism is not a form of ideology. Fetishism, rather, arises from “the peculiar social character of the labour which produces them” – not ideas, beliefs, or intentions.

But the focus of this post isn’t Marx but Derrida: the relation of deconstruction to materialism. [NB: I noticed, once I’d written this, that The Accursed Share’s latest post also covers this ground.]

May 17, 2008

I’m sort of torn between never writing on Marx again until I actually know what I’m talking about, and continuing to use this blog as a place to store my ignorant thoughts. The latter is what the blog’s meant to be for. But now that it actually has (a couple of) readers, there’s a bigger downside to making an idiot of myself.

I am unafraid! I laugh in the face of intellectual embarrassment! And I post the following:

What is this ‘value’ thing then? Specifically, what is this labour theory of value? On any straightforward reading, it seems just utter nonsense. The value of a commodity is a result of the labour involved in its production? Really really not. I don’t think that’s what proponents of the labour theory of value are actually saying… (?). But so what’s going on?

There’s a weird circularity to any discussion of value. Let’s say you tell the following story: the value of a commodity is a result of the labour involved in its production. But because of a social/economic system based on exploitation – and because of the difference between labour and labour power – labour itself can produce more value than the value required for the production of labour. That’s surplus value. A certain value of commodities is required in order to keep labour more or less trim – workers have to eat and house themselves, and the capitalist class pays wages that allow this, much of the time. But because the use value of labour is (in part) its ability to produce value, there is a disjunct (a disjointure) between value in and value out, in the production process. The difference between labour and labour power is the disjointure that enables the accumulation of value. So – it’s apparently possible to say – workers aren’t paid for the true value of their labour. Ground of critique.

But all value – every commodity – produced under capitalism is a result of this production process based on disjointure. So it seems to me that everything falls apart if we try to say something like “the true value of labour isn’t represented in labour’s wages”. Because value itself, under capitalism, is based on this injustice. Where are we getting the solidity of value – the ‘true’ value of labour – that allows us to frame a critique of exploitation?

Where does value come from? Is there a real, non-exploitative value somewhere, at the base or root of the system, with surplus value built on top of this true reality of value? I don’t think that Marx believes this. And even if he does believe this – or if some other Marxist thinker believes this – where are we getting this value from? What is the account of the formation of value, here? And why on earth would labour produce value in the first place?

Value has already come on stage when ‘Capital’ begins. Where has it come from? What is it?

~~~

I think there’s a parallel here with orthodox economics’ theory of value. Marshallian analysis tells us that value – exchange value – is the result of a meeting between demand and supply… and that demand is a result of the meeting of desire (understood in terms of utility) and ability to pay. Utility – this wholly fantasised concept – is here apparently the ground for value. But of course (putting aside the fact that there ain’t no such thing as utility) utility doesn’t explain exchange value at all. All utility analysis can tell us is why certain things are valued more than others – once value has already ‘come on stage’. Exchange value, in Marshallian analysis, comes from the meeting of utility and cost (more or less) – but cost is already there, already out there, outside of us, in the world, in the system within which exchange and utility-maximisation takes place. The social system of valuation, within which different powers compete to maximise their utility, obviously cannot be explained simply in terms of utility. So where do we get the general concept of value that’s part of the system within which we analyse the determination of specific values, by means of supply and demand?

Now – something along these lines is why I don’t think Marx should be understood as grounding his critique on any idea of value. (And again I think I’m in the ballpark of N Pepperell’s posts here – though very much don’t attribute any of these opinions to N Pepperell, I’ve probably misunderstood everything…). My current take on this situation is: Marx doesn’t say – there’s this thing called value, it’s produced by labour, but under capitalism labour is exploited because the value of its product is more than the value of its wages. Rather, the concept of value that’s operative under capitalism (and, therefore, in Marx’s work too) is itself one of the objects of Marx’s critique. Marx’s idea is that this concept of value is a product of an exploitative social system, and that the system needs to be destroyed. His critique of the system, however, is not based on deploying the idea of value. Exploitation is just exploitation – it’s obviously exploitation. If people have to do work they hate, work that hurts them, that shortens or ruins their lives, and they’re doing this work for most of their waking hours, to serve the interests of the ruling class… that’s exploitation. You don’t need a theory of the production of surplus value to identify it as such. So Marx doesn’t say – here’s my theory of value; it allows us to recognise and analyse exploitation. He says – here’s exploitation; the social syste within which its embedded produces a certain theory of value (and, more important, a set of social behaviours that can be understood in terms of value); let’s analyse this theory, and develop it, in order to better understand exploitation, and the capitalist system it’s part of. Value doesn’t ground anything for Marx – it’s part of what needs to be explained. So, I think, it’s possibly politically misguided to deploy a ‘Marxist’ theory of value as a way of critiquing capitalism. Theory of value isn’t the starting point, here; it’s more like an object of critique.

Not sure how much of this is incredibly obvious and how much of it’s incredibly wrong. The interesting point, for me, I think, is that if something like the above is in the ballpark of right, it may be a mistake to see Marx as offering a theory of value that’s been occluded in the economics canon. Marx deployed the economic theories of his time, and, more importantly, analysed the social conditions that created them. The ‘labour theory of value’ was the principle economic theory he analysed, because it was prominent when Marx wrote. But the labour theory of value is no longer prominent (though it may not be as dead as we’re told…). It would, I think, [perhaps] be a mistake to read Marx and say ‘the (Marxist) labour theory of value needs to be brought back’. Rather, we should say – ‘the labour theory of value is no longer so prominent; economics now understands value in other ways; what has changed in the structure of capitalism such that economic theory has also changed?’ That, I think, would be a ‘Marxist’ question. (And another question, while we’re at it: why has no one developed a comprehensive critique of political economy since Marx? What the hell happened to left theorising? We’re due another proper critique, folks, come on, get busy…)

Needless to say, all this is just totally underinformed. I wonder why I’m writing it down, when I could be studying…

April 17, 2008

It’s pretty clear that you can’t get any kind of a grasp of economics without understanding probability – the theory & philosophy of probability. I don’t. This post is just a place marker; a note to self that’ll shame me if I don’t spend time on probability.

Initial thoughts: Derridean that I am, I’m interested in the function of signs. Derrida sees (IMO) the quest of philosophy as the quest to abolish the sign – or, rather, the quest to abolish the distance between a sign and its object. This is also, of course, the quest to abolish uncertainty – because uncertainty is the difference between our representations of the world and the world itself.

Epistemology, then, is the attempt to understand the connection between signs and their objects; and, it’s often thought, a successful epistemology is one that guarantees a certain form of connection. Derrida works at undermining such guarantees – or at undermining the guarantees’ unassailability. This is what leads to the view of Derrida as a sceptic – a philosopher who also undermines any connection between our view of the world and the world as it really is.

This view of Derrida is based, however, on a vision of epistemology that Derrida’s thought also works to undermine. For seeing epistemology as an attempt to understand the link between representations and things in themselves presupposes an unmediated, guaranteed relationship between the subject of knowledge and the subject’s representations. This is the familiar flaw of much epistemology – at least the kind I was taught when learning analytic philosophy. It produces such wacky ideas as ‘qualia’. And an infinite regress always opens up: aren’t representations themselves a certain kind of thing-in-itself? The project of much phenomenological empiricism seems to be to create a new, subjective object of knowledge, that isn’t separated from us by a dark glass; an object we can possess as absolutely our own.

But, of course, a ‘subjective’ object is vulnerable to the same sceptical arguments as an ‘objective’ object. What is the subject’s relation to qualia? And if this is a relation of any kind, can’t that relation in principle also be broken, just as the relation between qualia and the world they potentially represent can be broken?

Derrida’s sceptical arguments are not directed at the ‘objective’ world, but at the ‘subjective objective’ of phenomenology. He does not argue that the link between signs and objects is always already broken – he has no interest in this question. Derrida argues that the sign itself is always already broken; that no sign can be fully apprehended or possessed. It is only the belief in an unmediated relationship between subject and sign – which is contrasted to a relationship between subject and object mediated by the sign – that allows scepticism, in its normal philosophical sense, to get started. Derrida’s arguments about signs are therefore profoundly anti-sceptical, on my read; but they also have a great deal to say about traditional epistemology, and the themes of certainty and uncertainty it meditates upon.

All this is clearly connected to Time, in a way that I don’t have much of a handle on. The locus of a guaranteed relation between subject and sign is the present; it is only present experience that possesses this quality of absolute belonging. And thus the claim that there is no such thing as the present – as it has been traditionally understood by philosophy – is at the heart of Derrida’s work.

I think that all this is probably very relevant to probability theory. But I don’t know how: it’s just a hunch. What I want to do, then, is try to get to grips with probability. For instance – it’s interesting to me that Keynes’s first major work (which he spent something like ten years writing) is a treatise on probability. From what I’ve gathered (from, like, paragraph-length summaries) Keynes’s thesis is that relationships of probability are logical in the same way as relationships of necessity. It’s interesting to me that Keynes developed this thesis in an intellectual environment (early 20th century Cambridge) that was also giving birth to analytic philosophy. Keynes’s philosophical mentor was G.E. Moore – and Keynes has remarked that Moore was just as important, for his intellectual development, as his economic mentor Marshall. I’d be interested to try to understand the connections between Keynes’s treatise and modal logic, as it subsequently developed in analytic philosophy. (I’ve never studied modal logic). And I’m also interested in Quine’s attempt to demolish modal logic – an attempt that, as I understand it, relies heavily on Quine’s belief that the ‘opacity’ of signs must be eradicated from logical analysis. This Quinian argument, it seems to me, is staggeringly vulnerable to Derridean critique.

But all this, as I say, is just a quick jotting down of ambitions and connections. As if this blog wasn’t already ambitious enough.

March 23, 2008

“GDP… is the total value of all final goods and services produced in an economy during a given period, usually a year.” I’ve said it before, but I’ll say it again (as I stare in bafflement and frustration at these pages of elementary macroeconomics): the distinction between ‘final’ goods and services and ‘intermediate’ goods and services is arbitrary nonsense (like the parallel distinction between consumption and investment). We have here two mututally supporting visions of the economy (which do not altogether correspond to the ‘money’ and ‘real’ economies): call them the circular and heirachical visions. On the one hand, the economy is a closed system of circulation, in which the concept of ‘final’ or ‘end’ purchase makes no sense. On the other hand, the economy is a system of appropriation, production, and consumption/expulsion, which receives inputs from outside the closed system (natural resources, say), and produces output that does not return to the closed system (which is consumed, in the double meaning of used and destroyed… or which is simply expelled, as with, say, pollution). The concept of ‘final product’ seems to belong to the second system, yet is understood in terms of the first.

And yet this second system is very hard to understand in a way that doesn’t reinscribe it within the idea of circular flow. As I’ve said before – the apparently most basic form of ‘consumption’ is eating, the ingestion of food (and drink). But this is also the most basic form of investment – the production of the productive resource of human labour. When the economy is divided between the two general institutions of households and firms, with firms’ output ‘consumed’ by households, this can be understood as part of the general social production of the category of labour. And this is in turn, no doubt, connected to the fact that, except for its function as the source of consumption, the institution of the ‘household’ falls entirely outside the system of economic valuation that finds its expression in GDP. The category of labour is, of course, created by the elision of domestic labour. But this may be just an example of the peculiar status of the ‘household’ among the institutions of our economy.

Insulting your intelligence again, let me share my latest textbook perplexity. In chapter two (of Krugman, Wells and Graddy’s ‘Economics: European Edition’) I was introduced to ‘the circular-flow diagram’ of the movement of money, goods and services in the economy. [Sorry about the appallingly ugly images, the result of a hasty google search. I can’t seem to access the images on Krugman et al’s web page.]

Worth noting here, perhaps, the basic institutional divisions. Polanyi would tell us that the market for goods and services is a real market, and that factor markets are in some sense ‘fictional’. I’m not sure I altogether agree with that; but let’s focus on the division between firms and households. One of my longstanding questions is something along the lines of: why does economic liberalism so often ally itself with social illiberalism – why, when we talk of the ‘right’, do we refer both to free market dogmatists and to homophobes, misogynists and racists? I’m no closer to answering that question (or understanding why it’s ill-posed…) but it is perhaps worth noting that the ‘household’ is an institution as important in the creation of this diagram as the ‘firm’.

Be that as it may, there’s a double-movement in this diagram: of money, circulating in one direction, and goods, services and factors, circulating in the other. One of my biggest perplexities, when studying (pre-elementary) economics, is the relation between the ‘real’ and the ‘money’ economies. This perplexity is only heightened when I reach a more sophisticated version of the ‘circular flow’ diagram, in chapter 24.

The issue is basically this: what do we mean by the creation of value? I find all this incredibly hard to think through, but let me start with the problem that money is at one and the same time a representation of value and value itself. We could find countless locations of the production of subtly different kinds of ‘value’ in this diagram. For instance: isn’t the household – the family unit – considered, at least in certain dominant ways of thinking (which I by no means want to renounce, but…) the locus of the most important values? Consider, if you want to, that ‘labour’ means not only the work purchased by a capitalist employer, but also the ‘work’ of childbirth. (Some connections here, no doubt, with the previous post on Nabokov…) If we think that life is what we value more than anything else – and, above all, the lives of our loved ones – then the family is the locus of the creation and nurturing of this value.

I think it’s fairly grotesque to write like this: the assimilation of important things to the language of economics, and their misrepresentation in so doing. But I also think…

(The production of commodities by means of commodities. Where commodities = us.)

My specific bafflement, today, is focused on this sentence of my textbook. “By our basic rule of accounting, which says that flows out of any box are equal to flows into the box, the flow of funds out of the markets for goods and services to firms is equal to the total flow of funds into the markets for goods and services from other sectors.” (p. 585). In fact, my bafflement is focused on the first half of the sentence: “By our basic rule of accounting, which says that flows out of any box are equal to flows into the box…”

Surely this ‘basic rule of accounting’ has to be complete nonsense. Our ‘circular flow diagram’ illustrates a closed system. If the flows out of any box in the diagram are equal to the flows into this box (assuming each arrow in the diagram depicts an unchanging quantity [and, I guess, velocity?] of funds) then the amount of ‘funds’ in the system is a constant. This is an economy involving no production (or loss of value). What nonsense.

(I’ve been corrected on this blog before (in a friendly and helpful way 🙂 ), when I’ve complained about elementary textbooks in this way – so I should say that, yes, I know that Krugman, Wells and Graddy don’t actually hold the stupid opinions that their teacher-personas ask us to take seriously. I know they’re being simplistic in the interests of pedagogy. But the bottom line is: don’t lie. If you’re trying to teach a subject, don’t lie. I mean – this lie is completely transparent. It isn’t fooling anyone. Why lie like this? Why treat your readers or students as if you think they’re worse than idiots? One of the strangest and most sinister features of all the education I’ve been subjected to: you progress by demonstrating your willingness to accept falsehoods. Let’s have no more of that, please.)

Plainly, the amount of ‘value’ in the economy can increase and decrease. But we can, provisionally, going along with the unacceptable formulations of vulgar economics, distinguish between two types of ‘value’: real value and monetary value. This isn’t a distinction between the value of money as adjusted for inflation, and the value of money on its own terms. It’s the distinction between the two movements of circular flow: the movement of the ‘real’ economy (goods and services) and the movement of the ‘money’ economy (money).

If the general value in an economy, let’s say, increases, then there are two forms of ‘production’ here. [We are bracketing off the many different alternative understandings of value – focusing only on the value of commodities/services and the value of money, as economists ask us to]. On the one hand: real production. The production of cars, say. On the other hand: monetary production. The production of money, in the financial sector.

In the circular-flow diagram Krugman, Wells and Graddy have chosen to illustrate their textbook, you have [going along with vulgar economics and bracketing out perhaps more pressing and important understandings of the meaning of ‘value’] two locations of the production of value.

1) The firm
2) The financial sector.

The amount of ‘value’ in the economy can increase in two ways.

1) The production of valuable goods (/services)
2) The production of money.

What’s fascinating and deeply weird is that these two different forms of the production of value are both almost entirely distinct and completely inseparable. Economic, capitalist value is created by the relation between money and commodities. If you didn’t have a money economy, you wouldn’t have value in the capitalist sense – the economists’ sense – at all. Value as economists understand it can’t be applied to goods in themselves, independent of the mediation of the money economy. But money in itself has no value independent of its relation of representation to ‘real’ value.

The current financial crisis is, obviously enough, an example of the production of money running far ahead of the production of commodities – to the point at which the ‘value’ of that money became unsustainable, it was so distant from the ‘real’ value that must (ultimately, in some sense) anchor all ‘monetary’ value. A crisis of overproduction is, perhaps, the opposite. [Though I need to do more reading…] So it can be tempting to say: well, ‘money’ value and ‘real’ value must, in some way, eventually, coincide (in the long run). While this reaction is, no doubt, appropriate enough, I think it can easily underestimate the sheer weirdness of the relation between the ‘money’ and the ‘real’ economies.

I, too, find the analogy I’m about to use both pretentious and (more to the point) stupid; but I’m going to use it anyway. If our economy exhibits a ‘circular flow’, this flow isn’t a double-movement in which two separate forms of value travel in opposite directions. It more closely resembles a Moebius strip, in which a single form of value is transformed, by its movement, into its opposite. (And that analogy needs to be immediately abolished, in favour of a less stupid, more helpful formulation.)

Obviously enough, I’m just trying things out for size here. One day, I promise, I’ll know what I’m talking about.

March 18, 2008

Every time I try to think about things using philosophy, I’m reminded just how little philosophy I’ve read. I need a great many years absorbing the canon before I can say anything worthwhile – and I don’t have them.

So, talking crap, let me talk about the opposition between existence and properties. On the one hand, you have the philosophical vision that underpins a certain form of empiricism: a substratum, the existent, which has certain sensible properties. The properties may come and go, but the substratum remains, for it is adamantine.

There are all sorts of problems here. For one, this substratum tends to, as it were, ‘drop out’. Since (at least in this empiricist vision) it seems to be the properties, and not the thing in itself, which we perceive, it becomes easy to deny the existence of the thing in itself. Then we’re left with an alternative philosophical vision, in which there are nothing but properties – with no fundamental being to which they are attached. At this point, the concept of existence itself becomes a product of properties, and we find ourselves with a kind of idealism.

If you want to, you can see this in terms of the vocabulary of analytic philosophy. For vision (1), take Russell’s theory of descriptions, in which there is an entirely empty ‘there is an object such that…’ and then a description of the object – a list of its properties. For vision (2), take the theory that (if I remember right…) Quine gestures towards, in which the concept of the class is genuinely basic, and the property of belonging to this or that class precedes our understanding of existence.

Does existence precede essence, or does essence precede existence? – is I guess the point. Or, rather, you obviously can’t understand existence and essence separately.

I hate writing like this. I need to do some reading. But I don’t have time.

Anyway – I want to make a highly shonky move from property in this philosophical sense to property in the economic sense. I don’t think this move is necessarily as shonky as it might appear; but it’s clearly a bit dodge. The point is this: the free market is based on the exchange of property. And the owners of property are, by and large, people. (Corporations too, of course; everything’s very complicated. But let’s try to keep it simple for the minute.) People exchange commodities: that’s the free market.

But I’ve been reading Marx and Polanyi. And what they both emphasise is that capitalism is born at the moment when labour becomes commodified (or, rather, in which certain kinds of human activity become commodified as labour). The basic institution of capitalism is a market for wage-labour. And labour is, in some ways, a very different commodity from any other. Because, to be simple about it, we are labour: labour is us.

I need to qualify that immediately: so of course labour isn’t a natural category; of course all our lives aren’t all labour; of course the very idea of labour, and the way in which it’s understood, is a product of institutions, social structures, mechanisms of discipline and control; it’s the creation of the concept of labour that we want to examine here.

But having said all that. In some sense we are labour; labour is us. A human being owns property. The question is: when a human being also becomes property, what becomes of her relation to herself? Is this relation a relation of ownership? Do I own myself; am I my own most basic property? Or does property not enter into a relationship that is, fundamentally, no relationship at all, but simple existence? Or is the question entirely ill-posed in these terms? And all these questions also need to be asked in relation to slavery – one of the most massive facts of early capitalism, which is by no means dead today.

Believe it or not, these remarks were prompted by trying to re-read some of Keynes’s General Theory, and being struck by the fundamental distinction he draws (p. 23), between the income of entrepreneurs, and the income of factors of production (by and large – labour.) What’s the basic distinction between entrepreneurs and others, which is operative in so much economic thought? Why are entrepreneurs seen as the demi-gods of capitalist culture? Isn’t it because only the entrepreneur fully owns herself? And therefore only the entrepreneur fully exists? According to this logic of existence and property.

And in trying to attack this logic, don’t we have to go deep into the concept of ownership – of property (‘the proper’, as Derrida calls it) – and its relation to (human) existence?